Work-for-dole to stay: Swan

Treasurer Wayne Swan has quashed speculation he is planning to axe the work-for-the-dole scheme, as the opposition intensified claims tonight's budget would set in stone Labor's "left-wing'' agenda.

Mr Swan will tonight deliver Labor's first budget in 13 years, and is expected to announce a massive surplus of between $17 billion and $22 billion.

Despite continuing inflationary pressures, the government will keep to its pre-election commitment of $31 billion in tax cuts.

Prime Minister Kevin Rudd said his government's first budget would be based on the long-term national interest, unlike the Howard government, which stoked the fires of inflation.

"As the (coalition) exited office, they were sitting on levels of expenditure growth on the part of the government which are right up there with the Australian Guinness Book of Records,'' he told parliament.

''(This was) at a time when we needed to be reining it in and instead those opposite were saying here's another bucket of kerosene, let's throw it on the fires of inflation.''

Among the budget measures to be announced tonight will be a lifting of the Medicare levy surcharge threshold, a rise in the luxury car tax and higher excise on flavoured alcoholic drinks.

But Mr Swan rejected newspaper reports that work-for-the-dole would be dumped.

"We're keeping work-for-the-dole,'' he said.

"We're going to invest more in training but we are keeping work-for-the-dole.''

Finance Minister Lindsay Tanner promised the Rudd government would not be indulging in vote-buying like its predecessors.

The budget would be "tough'', he said, but savings - which have been absent from the past four budgets - were necessary to fight inflation.

"The budget we inherited from the former Liberal government was awash with wasteful, inefficient short-term vote-buying initiatives,'' Mr Tanner told parliament.

Former treasurer Peter Costello, who has delivered the last 12 budgets, couldn't resist making a rare media outing on what used to be his biggest day of the year.

Mr Costello said Mr Swan was the luckiest-ever incoming treasurer, whose only headache was deciding what to do with a huge surplus.

"All the hard yards were done by the coalition, opposed by the Labor Party and inherited by Mr Swan, the luckiest incoming treasurer in Australian history,'' Mr Costello told reporters.

There is widespread speculation the budget will scrap some types of middle class welfare through a means test for payments like the baby bonus.

Welfare groups believe this is an appropriate strategy.

Michael Raper, from the National Welfare Rights Network, said the government was right to take a tougher line on family payments to the rich.

"I would have thought the top marginal tax rate was a fair cut-out point,'' Mr Raper told ABC Radio.

"Families on incomes over that mark don't really need upside-down welfare, or welfare for the well-off.'' But the opposition claims it is more about ideology.

Opposition Leader Brendan Nelson told coalition MPs and senators that the Rudd government was looking to bring back a left-wing agenda.

"What we are seeing is the left agenda coming back,'' Dr Nelson told a joint parties meeting.

And his deputy Julie Bishop predicted the budget would be a "war on wealth''.

"We have heard about the war on inflation, the war on binge drinking - there will probably be a war on obesity next - and what we are seeing now is a war on wealth,'' she told her colleagues.

Mr Swan will begin delivering his budget speech in the House of Representatives at 7.30pm.